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Sophisticated imitation in cyclic games

Author

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  • Josef Hofbauer

    () (Department of Mathematics, University of Vienna, Strudlhofgasse 4, A-1090 Wien, Austria)

  • Karl H. Schlag

    () (Economics Department, European University Institute, Via dei Roccettini 9, 50016 San Domenico di Fiesole, Italy)

Abstract

Individuals belonging to two large populations are repeatedly randomly matched to play a cyclic $2\times 2$ game such as Matching Pennies. Between matching rounds, individuals sometimes change their strategy after observing a finite sample of other outcomes within their population. Individuals from the same population follow the same behavioral rule. In the resulting discrete time dynamics the unique Nash equilibrium is unstable. However, for sample sizes greater than one, we present an imitation rule where long run play cycles closely around the equilibrium.

Suggested Citation

  • Josef Hofbauer & Karl H. Schlag, 2000. "Sophisticated imitation in cyclic games," Journal of Evolutionary Economics, Springer, vol. 10(5), pages 523-543.
  • Handle: RePEc:spr:joevec:v:10:y:2000:i:5:p:523-543
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    Cited by:

    1. Luckraz, Shravan, 2013. "On innovation cycles in a finite discrete R&D game," Economic Modelling, Elsevier, vol. 30(C), pages 510-513.
    2. Ana B. Ania, 2000. "Learning by Imitation when Playing the Field," Vienna Economics Papers 0005, University of Vienna, Department of Economics.
    3. Offerman, Theo & Schotter, Andrew, 2009. "Imitation and luck: An experimental study on social sampling," Games and Economic Behavior, Elsevier, pages 461-502.
    4. Balkenborg, Dieter & Schlag, Karl H., 2007. "On the evolutionary selection of sets of Nash equilibria," Journal of Economic Theory, Elsevier, vol. 133(1), pages 295-315, March.
    5. Beggs, A.W., 2005. "On the convergence of reinforcement learning," Journal of Economic Theory, Elsevier, vol. 122(1), pages 1-36, May.
    6. Alanyali, Murat, 2010. "A note on adjusted replicator dynamics in iterated games," Journal of Mathematical Economics, Elsevier, vol. 46(1), pages 86-98, January.
    7. Lipatov, Vilen, 2003. "Evolution of Tax Evasion," MPRA Paper 966, University Library of Munich, Germany, revised 06 Dec 2005.

    More about this item

    Keywords

    Strictly improving - Matching pennies game - Replicator dynamics - Limit cycle - Discretization;

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other

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